The duel between Amazon and California over sales tax may finally be coming to a conclusion. A new Amazon sales tax deal would allow Amazon to postpone collecting sales tax from California consumers until September 2012.
This tentative deal comes only after the California legislature was unable to pass a vote that would have forced Amazon to start collecting tax immediately.
Many brick-and-mortar businesses in California and across the nation have felt slighted by Amazon's prices. It can be difficult for physical businesses to compete with online prices, especially when online sellers don't collect sales tax from consumers.
This is because under a Supreme Court decision, online retailers like Amazon usually aren't required to collect sales tax unless they have a physical presence in the state, like a store or a company office.
A new California law that took effect on July 1st would force retailers like Amazon to collect sales tax. The California law mandates sales tax collection for companies that have workers, warehouses, or other offices in California.
This California law is broader than the Supreme Court decision. While Amazon doesn't have a "physical presence" in California, it does have enough of a presence in California that it would have to collect sales tax.
It's no surprise that Amazon has decided to fight the new California law. The company has been pouring money into trying to get a referendum on the next ballot to get the law overturned.
If this new deal goes through, it would make it a near-certainty that Amazon will need to collect taxes starting next year.
Is this a raw deal for California, who will be missing out on millions of sales tax revenue? Maybe not, as without a deal they would likely have to deal with fighting Amazon's referendum.
But, Amazon's California sales tax battle is far from over. The Amazon sales tax deal is still tentative, and hasn't been finalized, reports the San Jose Mercury News. And, Amazon is likely hoping that Congress will step in and pass legislation that would override California's online sales tax laws.
- Amazon.com cuts California sales tax deal in stunning turnabout (San Jose Mercury News)
- Do You Have to Pay Sales Tax on Internet Purchases? (FindLaw)
- Will Calif. Internet Sales Tax Hurt Your Business? (FindLaw's Free Enterprise)
- Will 'Amazon Tax' Kill Small Biz Affiliate Programs? (FindLaw's Free Enterprise)